Emma wrote recently to ask me:

I have a question about Fraud Protection services that are offered by credit card companies – basically, you pay a set fee each month and someone supposedly watches your credit report. Is this a worthwhile service, or just a money grab? The reason I ask is that I had my wallet stolen over the weekend (and they got my SIN, and pay stub which shows my address and well, everything) and when getting my cards reissued, one of the credit card companies offered this service. I signed on for the first 30 days (free) but will need to pay $14.99/month afterwards. So, long story short, am I wasting my time and money with this service?

Identity theft and fraud are problems that are growing so quickly that an entire industry is springing up to help people deal with them. It’s been estimated that if you’re ID is stolen, it could take up to 600 hours to get it all straightened out. That’s 75 continuous working days! The solution: to have your credit monitored by a service so you don’t have to do the work yourself. The question: Are you prepared to lay out $180 a year or more to have someone “watch” your ID, just in case?

Credit report monitoring is sold by fuelling consumers’ fear of fraud. Those who have already been victims are the easiest touches. While touted to be the best way to protect yourself from ID theft, credit report monitoring only watches one window through which an ID thief may climb to grab your good name. Other services exist, which review online public records for signs of SIN/SSN fraud, stolen credit-card account trafficking and other types of ID theft. Too new to really assess how useful they are, it is worth noting that neither the U.S. Federal Trade Commission nor any consumer group focusing on ID theft issues currently endorses these credit-monitoring services.

If you’re interested in using a credit report monitoring service, you should ask some questions.

Do you offer protection against theft of my Social Insurance/Security Number? You may think it’s a given that a body’s credit information is anchored to their SIN/SSN so that your credit file won’t be mixed up with a like-named body elsewhere, but that ain’t necessarily so. Credit bureaus sometimes create “temporary fragmented files” using your SIN/SSN but with a different name and address (think about when a woman marries and changes her name, or when you buy a house or move) and this weakness in the system is just the window fraudsters are waiting to climb through. The credit monitoring service will never pick up the overlap as long as the credit bureau keeps your credit file separate from that of the ID thief so you’ll never know what’s happening UNTIL a collection agency tries to collect from you for thief’s bad accounts.

How many different information services will you monitor on my behalf? Your credit monitoring service needs to cover as many information sources as possible since creditors do not always report to all credit bureaus.

What will you alert me of, and how often? You want a service that alerts you to any activity on a dormant account, increases in credit balances, changes to existing accounts, and the appearance of a negative on your record. And you want those notifications within 48 hours of the change.

If you decide that those fraud protection services aren’t offering you good value for the money, then you need to take some steps of your own to protect your ID. Since it’s been estimated that lost or stolen wallets, chequebooks, and credit cards account for about 30% of cases in which ID thieves prosper, it is extremely important that you do whatever you can to keep your personal information safe. Why would you carry your SIN/SSN card in your wallet? Memorize the number and put the card away somewhere safe. Do not put your telephone number and address on your cheques, and protect your PIN numbers and credit cards from prying eyes. Don’t carry unessential documentation with you; your wallet should hold the bare minimum of information about you.

Don’t assume that because you’re among family and friends that your ID is safe. Half of all credit fraud is committed by people in your immediate sphere, so don’t leave your mail, statements, wallet lying around at work or at home. Shred everything you’re putting in the garbage. And be careful who might be listening or watching when you enter information in your computer, order by phone, or have discussions about your money.

Review your bank and credit card statements thoroughly so you spot anything unusual right away. If you’re banking online, make it a habit to check your account every day. Cancelling paper statements and opting for online statements is another way to protect your personal information assuming your computer is secure. Never use a public computer to do money business since thieves have sophisticated tracking software which they use to steal passwords.

Have a wireless network at home? Make sure you’ve incorporated password-protection and encryption. And when you’re accessing information via public hotspots, use a personal firewall. Be aware of phishing scams. Never respond to email requests for personal or financial information, or that prompt you to click a link to provide your personal or financial information.

Even your smartphone can be a widow for thieves. Since anything you delete from a smart phone isn’t really deleted (the menu is erased is all), when you move from one phone to another, all your info is there for the grabbing. Ditto if you lose your phone. So you have to be as sensible about how you dispose of an old phone as you would be about how you dispose of an old desktop or laptop.

You know, sometimes when you get me started on a topic, you just can’t shut me up so….Next Tuesday: More about Protecting Yourself Against Fraud